1. A firm has a monopoly on a new type of gaming console. The market demand is g
ID: 1097535 • Letter: 1
Question
1.
A firm has a monopoly on a new type of gaming console. The market demand is given by P=317.5-0.004*Q and thus marginal revenue is MR=317.5-0.008*Q. The monopolist's marginal cost is MC=8.8+0.001*Q. Calculate the profit-maximizing production quantity.
2.
A pharmaceutical firm has a monopoly on a new class of vasodilator. The market demand is given by P=200-0.03*Q, and thus MR=200-0.06*Q. The monopolist's marginal cost is constant and equal to 20. Calculate the profit-maximizing price.
3.
What type of taxes are used to promote economic equality?
proportional
regressive
indirect
progressive
4.
Which of the following is an in-kind transfer to raise the living standard of the poor?
capital gains
free medical clinics
a welfare payment
the Earned Income Tax Credit
5.
If entry-level labor markets were perfectly competitive, which of the following would be caused by an increase in the minimum wage?
a shortage of job candidates for openings
increase in the surplus employers get from the labor market
decrease in quantity of labor hired
decrease in unemployment
6.
Which of the following describes a market with monopolistic competition?
many firms selling slightly different products
one firm selling one product
one firm selling several products
many firms selling the same product
7.
Which of the following is necessary to a firm
proportional
regressive
indirect
progressive
4.
Which of the following is an in-kind transfer to raise the living standard of the poor?
capital gains
free medical clinics
a welfare payment
the Earned Income Tax Credit
5.
If entry-level labor markets were perfectly competitive, which of the following would be caused by an increase in the minimum wage?
a shortage of job candidates for openings
increase in the surplus employers get from the labor market
decrease in quantity of labor hired
decrease in unemployment
6.
Which of the following describes a market with monopolistic competition?
many firms selling slightly different products
one firm selling one product
one firm selling several products
many firms selling the same product
7.
Which of the following is necessary to a firm
Explanation / Answer
Profit maximizing condition is MR = MC. Thus, the equilibrium quantity is 34,300 units. MR = MC, thus, Q = 3000 units Progressive Free medical clinics Decrease in quantity of labor hired Many firms selling slightly different products The firm must face demand that isn’t perfectly elastic No close substitutes
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